Should I File ITR After Receiving Rs 10 Lacs From Friend To Buy A House?

Ans: You have received Rs. 10 lakh from a friend for purchasing a house. The friend has stated that you can return it when your daughter starts earning. Since you have not been filing tax returns, let’s assess whether you should file a return and how to declare this amount.

Is Filing an ITR Necessary?
You don’t have taxable income, so filing is usually not required.
However, Rs. 10 lakh in your account can attract scrutiny.
To avoid future issues, filing an ITR is advisable.
It helps maintain transparency with the tax department.
How to Declare This Amount?
This is not a gift because a gift from a friend is taxable if above Rs. 50,000.
It is best to treat this as a loan.
Loans from friends do not attract tax but should be documented.
Declaring It Under the Right Income Head
A personal loan is not income, so it does not fall under "Income from Other Sources."
It is not taxable, but should be disclosed as "Loan Taken" in the balance sheet section of ITR.
If interest is paid on the loan, that interest will be taxable for the lender.
Steps to Ensure No Future Tax Issues
Keep a written agreement mentioning the loan terms.
The agreement should mention that repayment will be made after your daughter starts earning.
Ideally, the friend should transfer funds through a bank and not in cash.
If the tax department questions the transaction, you can show this agreement.
Final Insights
Filing an ITR is recommended for clarity.
Declare the amount as a loan, not a gift.
Maintain proper documentation to avoid future issues.
Ensure transactions happen through a bank for transparency.


Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment